End of Module Project
Identify a small investment project in your workplace, or other organization. This should be small enough to for you to be able to gather the data on likely benefits, costs etc. For example, this could be a small extension to the IT infrastructure, the possible purchase of one or two additional delivery vehicles, or the recruitment of staff for a new venture. Briefly explain the importance of your choice.
Prepare a budget for the initial cost, and major running costs and revenues (or cost savings) for the first few years (typically about three to five years). Explain the sources of your data.
Using your gathered data, appraise the potential investment, including a brief identification of relevant non-financial matters.
This assessment is intended to complement the regular assignments and discussions, and to draw together material from the second half of the module in particular.
Part 1 sets the context, and any reasonable investment will gain credit, together with a brief justification of the choice.
Part 2 will be specific to the workplace, but would typically show five or six main costs headings, set against either revenues from the investment, or against cost savings.
The format of the budget should follow a conventional layout, ie subtracting total budgeted costs from the total revenue/savings, and hence showing budgeted surpluses, all for each year.
The explanation of sources will be specific to the workplace, but should explain both the source and problems of data collection.
Part 3 should be based on net surpluses from part 2, and should compare these against the initial investment.
A good answer will consider the investment appraisal according to more than one technique, and will typically include at least payback and NPV. No detailed explanations of the techniques are required. You should focus on the calculations, and any necessary assumptions , clearly concluding as to the financial viability of the project.
Non-financial issues will typically cover matters such as staff motivation, environmental issues and fit with the wider business.
The learning outcomes for this assignment are:
- Apply appropriate techniques to analyze and evaluate financial performance
- Make financial decisions based on financial information